Four Army National Guardsmen Indicted

   5/28/2016 - Greenbelt, Maryland – Three guardsmen from the District of Columbia Army National Guard have been indicted on charges arising from a scheme to use Bitcoin to buy stolen credit and debit card numbers from foreign websites, re-encode cards issued in their names with those stolen numbers, and then fraudulently purchase items at Army and Air Force Exchange Service (AAFES) stores on military bases and elsewhere for use and resale (Shelton Stewart Indictment). Those indicted included Derrick K. Shelton, II, 28, of Washington, D.C.; James C. Stewart, III, (J. Stewart) 25, of District Heights, Maryland; and Quentin T. Stewart, 28, of Parkville, Maryland.
   A fourth national guardsman, Vincent Anthony Grant, 27, of Laurel, Maryland was also indicted in a separate case involving a similar fraud scheme (Grant Indictment). The indictments were returned on May 9 and unsealed on May 20 following the arrests of the defendants.
   The indictments were announced by United States Attorney for the District of Maryland Rod J. Rosenstein, Special Agent in Charge Robert Craig of the Defense Criminal Investigative Service - Mid-Atlantic Field Office (DCIS); and Special Agent in Charge Kevin Perkins of the Federal Bureau of Investigation, Baltimore Field Office.
   Shelton, J. Stewart and Grant were specialists, and Q. Stewart was a former sergeant, all in the District of Columbia Army National Guard.
   “Bitcoin” is a digital currency that operates through an online, decentralized ledger system. Bitcoin is not issued by any government, bank, or company, but rather is generated and controlled through computer software operating through a decentralized network. Bitcoin can be exchanged for other currencies, products, or services.
   The Shelton Stewart Indictment alleges that from July 2014 to May 2015, Shelton, J. Stewart and Q. Stewart, along with co-conspirator Jamal Moody and others, used Bitcoin to purchase stolen credit and debit card numbers of individuals and businesses from foreign internet websites. They selected and purchased stolen credit and debit card numbers of individuals and businesses holding federal credit union accounts, and those with billing addresses in or near Maryland. They bought magnetic strip card-encoding devices and software to re-encode credit, debit and other cards with the stolen credit and debit card numbers.
   According to the Shelton Stewart Indictment, the defendants used the cards they fraudulently re-encoded to buy merchandise, including gift cards, electronic items, and luxury goods, from AAFES stores on U.S. military bases, and other locations in Maryland and elsewhere. They used the merchandise themselves or resold the merchandise.
   The Grant Indictment alleges that from July 2014 to April 2015, Grant, along with co-conspirator Moody and others, engaged in a scheme similar to the one described above.
   Shelton, J. Stewart and Q. Stewart face a maximum sentence of 20 years in prison for conspiring to commit wire fraud, and wire fraud. Grant faces a maximum sentence of seven and half in prison for conspiring to commit access device fraud. All four defendants also face a mandatory minimum of two years in prison for aggravated identity theft, consecutive to any other sentence imposed. The defendants had their initial appearances last week and were released under pretrial supervision, except for Quentin Stewart who is scheduled to have a detention hearing tomorrow, May 24, 2016, at noon before U.S. Magistrate Judge Charles B. Day in U.S. District Court in Greenbelt.
   An indictment is not a finding of guilt. An individual charged by indictment is presumed innocent unless and until proven guilty at some later criminal proceedings.
   In a separate proceeding, Jamal Alexander Moody, age 28, of Oxon Hill, Maryland, and Waynesboro, Pennsylvania, who was also a specialist in the District of Columbia Army National Guard, pleaded guilty to conspiring to commit access device fraud and aggravated identity theft. Moody admitted that from July 2014 to April 2015, he purchased a magnetic-strip card-encoding device which he used to re-encode credit and debit cards issued in his name with more than 100 stolen credit and debit card numbers of other individuals that he purchased through Bitcoin transactions. Moody used the fraudulently re-encoded cards to purchase – often from AAFES stores - gift cards or electronic and luxury goods for resale. Moody is awaiting sentencing.
   The Maryland Identity Theft Working Group has been working since 2006 to foster cooperation among local, state, federal, and institutional fraud investigators and to promote effective prosecution of identity theft schemes by both state and federal prosecutors. This case, as well as other cases brought by members of the Working Group, demonstrates the commitment of law enforcement agencies to work with financial institutions and businesses to address identity fraud, identify those who compromise personal identity information, and protect citizens from identity theft.
   Source: Financial Fraud Enforcement Task Force

Medical Data Theft: Is There an End in Sight?

By Steve Rensberry
srensberry@rensberrypublishing.com

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   (RPC) – 4/7/2015 - Details continue to emerge about the data breach reported last month by Premera Blue Cross, a breach which involved the personal medical records of roughly 11 million people. Some of those records go back more than 14 years. Premera's plight, unfortunately, is emblematic of a much broader crisis in health care data theft that has been building ever since the push toward digital health care record began – a situation which more than just a few of us in the media had raised questions about at the time.
   In February, 2015, insurance giant Anthem, Inc., reported the theft of data in December of 2014 involving an estimated 80 million current and former members, putting at lifetime risk anyone who has ever been a customer of Empire Blue Cross and Blue Shield, Caremore, Amerigroup, Unicare, Healthline, DeCare, Anthem Blue Cross and Blue Shield, and Blue Shield of Georgia.
   The Anthem theft is widely seen as one of the largest data thefts in U.S. history.
   While there is speculation on precisely what data was taken in the Premera Blue Cross case, the company cites Social Security numbers, clinical information, bank account information, birthdays, the names of applicants and their family members, and other contact and identification numbers as among the type of information that was stolen. Anthem said it does not have a reason to believe bank or credit card information was stolen, but does site income information, birth dates, Social Security numbers, email and address information.
   Premera is currently facing at last five separate class action suits. Anthem is facing numerous lawsuits as well, including one filed by St. Louis County in Missouri against Blue Cross Blue Shield. Three suits were filed against Anthem within a day after the breach was made public.
How sophisticated were the attacks? Not a sophisticated as they would have you believe, experts say.  In the Anthem incident, the company altogether avoided the encryption of sensitive customer data, with data thieves apparently making us of simple email “phishing” attacks, aimed at several employees which network access.
   In both cases, thieves were able to steal some of the most valuable data there is – people's Social Security numbers, birth dates, and addresses – data that rarely if ever changes and which can be used to commit fraud for many years to come.
   According to the Fifth Annual Study on Medical Identity Theft, the medical identify theft problem grew by approximately 22 percent this past year. The massive Anthem and Premera breaches will likely bump the percentage higher yet again this year. 
   The Secretary of the U.S. Health and Human Services Office for Civil Right is required by section 13402(w)(4) of the HITECH Act to post a lit of security breaching involving “unsecured protected health information affecting 500 or more individuals.
   A summary of the largest breaches since 2010, by name of covered entity and individuals affected, is as follows:

• Anthem Inc. Affiliated Covered Entity (78,800,000).
• Premera Blue Cross (11,000,000)
• Science Applications International Corporation (4,900,000)
• Community Health Systems Professional Services Corp. (4,500,000)
• Advocate Health and Hospitals Corporation, d/b/a Advocate Medical Group (4,029,530)
• Xerox State Healthcare, LLC (2,000,000)
• IBM (1,900,000)
• GRM Information Management Services (1,700,000)
• AvMed, Inc. (1,220,000)
• Montana Department of Public Health and Human Services (1,062,509)
• Blue Cross Blue Shield of Tennesseek Inc. (1,023, 209)
• Sulter Medical Foundation (943,434)
• Horizon Healthcare Services, Inc., doing business as Horizon Blue Cross Blue Shield of New Jersey and its affiliates (839,711)
• Iron Mountain Data Products, Inc. (800,000)
• Utah Department of Technology Services (780,000)
• AHMC Healthcare Inc. and affiliated hospitals (729,000)
• Eisenhower Medical Center (514,330)
• Triple-S Management, Corp; Triple-S Salud, Inc. (475,000)
• Affinity Health Plan, Inc. (344,579)
• Southerland Healthcare Solutions (342,197)
• Emory Healthcare (315,000)
• Touchtone Medical Imaging (307,528)
• Shred-It International Incorporation (277,014)
• Seacoast Radiology, PA (231,400)
• Southern California Department of Health and Human Services (228,435)
• Indian Health Service (214,000)
• Digital Archive Management (189,489)
• RCR Technology Corporation (187,533)
• Millennium Medical Management Resources, Inc. (180,111)
• Walgreen Co. (160,000)

   Of the top 100 largest data theft incidents to date, a quick count suggests that approximately 29 involved a compromised network server, eight involved computer desktops, 19 involved laptop computers, 23 involved some other type of portable device, 12 involved paper/films, three involved email, and seven involved some other type of electronic medical records.
   What do thieves want with your medical records? The answer is apparent in at least one other troubling trend this year, that being tax refund fraud, which has been reported at escalating levels nationwide. In addition to filing fraudulent tax returns,the U.S. Federal Trade Commission warns: “A thief may use your name or health insurance numbers to see a doctor, get prescription drugs, file claims with your insurance provider, or get other care. If the thief’s health information is mixed with yours, your treatment, insurance and payment records, and credit report may be affected.”
   Is there an end in sight to the health care and medical data theft trend, or has Pandora's Box been forever opened? Only time will tell.
   For further reference, see:  U.S. Department of Health and Human Services Office of Civil Rights Breach Portal; or the Federal Trade Commission - Medical Identity Theft.

Leader in large-scale identify theft ring pleads guilty

    NEWARK, NJ - 1/16/2012 - The leader of a fraud ring that engaged in identity theft and financial crimes which have led to charges against 54 individuals admitted January 9 to directing the large scale, sophisticated criminal enterprise, U.S. Attorney Paul J. Fishman has announced.
   Sang-Hyun Park, a/k/a “Jimmy,” 45, of Palisades Park, N.J., pleaded guilty to a five-count information charging him with conspiracy to unlawfully produce identification documents and false identification documents (count one); conspiracy to commit wire fraud affecting financial institutions and bank fraud (count two); aggravated identity theft (count three); money laundering (count four); and conspiracy to defraud the Internal Revenue Service (count five).
   Ho K. Yu, a/k/a “Edmund,” 59, of Tenafly, N.J.—a co-conspirator who fraudulently established credit scores for the enterprise’s customers and fraudulently obtained hundreds of thousands of dollars in commercial loans for others—also pleaded guilty today to a three-count Information charging him with conspiracy to commit wire fraud affecting financial institutions.
   Park was arrested on Sept. 16, 2010, in a coordinated law enforcement takedown of 53 individuals in connection with widespread, sophisticated identity theft and fraud, including 43 other individuals charged along with Park with participating in one large-scale criminal enterprise. Yu was arrested and charged the next day.
   “Today, ‘Jimmy’ Park admitted he ran an organization which obtained social security numbers through fraud, manufactured fake IDs, ripped off banks and retailers, and laundered a portion of millions in profits overseas,” Fishman said. “This criminal enterprise combined traditional identity theft with sophisticated credit card fraud, and dismantling it is a signal success in combating the emerging problem of international organized crime.”

  Both defendants pleaded guilty before U.S. Magistrate Judge Patty Shwartz in Newark federal court. According to documents filed in these cases and statements made in court:
   “Sang-Hyun ‘Jimmy’ Park was the head of a New Jersey crime conglomerate which advertised, facilitated, and supported a multitude of frauds resulting in staggering economic losses,” Special Agent In Charge of the FBI’s Newark Division Michael B. Ward said. “Park and his cohorts supervised as willing participants obtained social security numbers with false identities, applied for out of state driver’s licenses utilizing these identities, quickly built fraudulent credit histories, and then opened bank and credit accounts. Afterwards, Park and associates would commit various frauds with the assistance of collusive merchants and others steeped in white-collar crime. The criminal activity was sophisticated, and was designed to evade detection from law enforcement.”

 Sang-Hyun Park 

   Sang-Hyun Park, a/k/a “Jimmy,” was the leader of a criminal organization (the ‘Park Criminal Enterprise”) headquartered in Bergen County, N.J., that obtained, brokered, and sold identity documents to customers for the purpose of committing credit card fraud, bank fraud and tax fraud. As part of the scheme, the Park Criminal Enterprise obtained Social Security cards beginning with the prefix “586.” Social Security cards with that prefix were issued by the United States to individuals, usually from China, who were employed in American territories, such as American Samoa, Guam, and Saipan. The Park Criminal Enterprise sold the cards to its customers and then escorted the customers to various states to use them to obtain identification cards and driver’s licenses.
   The Park Criminal Enterprise then engaged in the fraudulent “build up” of credit scores associated with these fraudulently obtained identities. They did so by adding these identities as authorized users to the credit card accounts of various co-conspirators who received a fee for this service—members of the enterprise’s credit build up teams. By attaching the identities to these existing credit card accounts, the teams increased the credit scores associated with the identities to between 700 and 800. The members of the build up teams knew neither the real person to whom the identity belonged nor virtually any of the customers who had purchased the identities.
   After building the credit associated with these identities, Park and his co-conspirators directed, coached, and assisted his customers to open bank accounts and obtain credit cards. Park and his co-conspirators then used these accounts and credit cards to commit fraud. In particular, Park relied on several collusive merchants who possessed credit card processing, or swipe, machines. For a fee, known as a “kkang fee,” these collusive merchants charged the fraudulently obtained credit cards, although no transaction took place. After receiving the money into their merchant accounts from the credit card elated to these fraudulent transactions, the collusive merchants gave the money to Park and his co-conspirators, minus their “kkang fee.”
   Among other things, Park admitted that he operated the criminal enterprise out of several offices in Bergen County, N.J., ran advertisements in local newspapers to attract customers interested in his illegal services, met with customers and other co-conspirators and otherwise directed the activities of the criminal enterprise. He also admitted that he obtained and sold 586 social security cards to his customers and members of his criminal enterprise escorted more than 100 customers to various states so they could fraudulently obtain identification cards and driver’s licenses using the 586 Social Security cards and other fraudulent documents—such as counterfeit Chinese passports.
   Park also admitted he conspired with and paid cash to various “build up teams,” which included Yu, to build the credit scores and establish credit histories for the fraudulent identities that he had sold to his customers. Park also told Judge Shwartz he laundered portions of the money he obtained through the fraud by wiring the money to various accounts in South Korea.
   In total, Park defrauded various credit card companies, banks, and lenders out of approximately $4 million. He and his co-conspirators also claimed more than $182,000 in tax refunds from the Internal Revenue Service through the filing of false and fictitious tax returns and accompanying documents.
   At sentencing, Park faces a maximum potential penalty of 15 years in prison and a $250,000 fine on count one; 30 years in prison and a $1 million fine on count two; a two-year mandatory minimum term in prison on count three; 20 years in prison and a $500,000 fine on count four; and five years in prison and a $250,000 fine on count five. Sentencing for Park is currently scheduled for April 23, 2012. He is currently detained.

Ho K. Yu

   Yu admitted his role in three separate conspiracies, including that from 2001 through 2002, he conspired with others to fraudulently obtain hundreds of thousands of dollars in small business loans for unqualified borrowers. To obtain these commercial loans, Yu and his co- conspirators submitted false loan applications and supporting documents to a lender. The vast majority of these loans defaulted, resulting in significant losses to the lender.
   Yu also admitted that between 2006 and January 2009, he conspired with others to obtain hundreds of thousands of dollars in personal business loans for unqualified borrowers. In furtherance of this conspiracy, Yu and a co-conspirator manufactured false tax returns and W-2 forms and submitted them with bogus loans applications to lenders. The vast majority of these loans defaulted, resulting in significant losses to the lenders.
   Finally, Yu admitted that he conspired with Park and others by fraudulently building credit scores for Park’s customers who were using 586 identities. Yu acknowledged that he received approximately $500 in cash for each identity he added to his accounts. In total, Yu and his co-conspirators caused in excess of $2.5 million in losses to banks, credit card companies, and other lenders.
   At sentencing, Yu faces a maximum potential 30 years in prison and a $1 million fine on each of the three counts to which he pleaded guilty. Sentencing for Yu is currently scheduled for April 23, 2012.
   U.S. Attorney Fishman praised special agents of the FBI, under the direction of Special Agent in Charge Ward in Newark; IRS-Criminal Investigation, under the direction of Special Agent in Charge Victor W. Lessoff; the Department of Homeland Security’s Immigration and Customs Enforcement, Homeland Security Investigations, under the direction of Acting Special Agent in Charge Andrew M. McLees; the Federal Deposit Insurance Corporation-Office of Inspector General, under the direction of Inspector General Jon T. Rymer; and the Bergen County Prosecutor’s Office, under the direction of Prosecutor John L. Molinelli and the Office’s Chief of Detectives Steven Cucciniello for their work leading to the guilty pleas.
   The government is represented by Assistant U.S. Attorneys Barbara R. Llanes of the U.S. Attorney’s Office Criminal Division and Anthony Moscato of the Office’s Organized Crime/Gangs Unit in Newark.
   Numerous members of the Park Criminal Enterprise have pleaded guilty to various offenses in support of the enterprise’s fraudulent schemes. As for the defendants with pending charges, the charges and allegations contained in the charging documents against them are merely accusations, and the defendants are considered innocent unless and until proven guilty.

   Source: U.S. Attorney's Office news release, FBI Newark Division

Cybercrime Complaints Suggest Threat is Growing

By Steve Rensberry
rensberrypublishing.com 

   (RPC) - 11/16/10 - Hitting number 2 million on the cybercrime complaint meter is just one piece of evidence pointing to the growth of online crime, a newly released report from the Internet Crime Complaint Center suggests.
   In an announcement made this week, the center said that it had hit the new high after reaching complaint number 1 million in 2007, seven years after it was formed in early 2000.
   "It took half that time to receive the 2 millionth complain, which illustrates the IC3's increased visibility and the continued growth of cybercrime," the announcement says.
   All told, the IC3 has served as the sounding board for 757,016 complaints in the past 10 years, which it has referred to the appropriate authorities for investigation. It pegs the total financial loss at $1.7 billion.
   "Many complaints involved identity theft, such as loss of personally identifying data, and the unauthorized use of credit cards or bank accounts," the report says.
   But as broad as the criteria is for what constitutes a crime, judging the actual extent of it may be difficult.
   Security software giant Symantec released a study in September that suggested virtually the same thing -- that Internet crime was going gonzo.
   Even with the obvious vested interest, the Symantec study did carry some degree of balance, pointing to malware attacks as the largest and most common form of Internet crime. Given that it is the nature of most malicious software, malware in particular, to replicate and distribute itself automatically, apart from human hands, it may be prudent not to deem each infected computer as a distinct and separate crime. For purposes of definitive trend analysis, the verdict may still be out.
   The full 2010 Cybercrime Report from Symantec is available here: http://www.symantec.com/redirects/norton/norton_com/cybercrimereport/
   The Internet Crime Complaint Center report is available here: http://www.ic3.gov/media/default.aspx
   Still, Symantec does have a point to make, as it states in its preface to the report:
   "Cybercrime has become a silent global digital epidemic," it says. "This disturbing truth is uncovered by this new ground-breaking study into the dangers, financial cost and emotional fallout of unprotected and unethical life online."
   There is also the issue of just how very easy it is to commit crime online. Ordinary people who would never consider taking something that does not belong to them while in a physical store, will and do engage in online piracy -- partly because of the anonymity but largely because of the simply ease in which it can be done. Copy. Paste. Click. Download. It's gone beyond simple.
   The Internet Crime Complaint Center is jointly operated by the FBI and the National White Collar Crime Center.

For further reading:
Internet Crime Complaint Center
Cybercrime is Rampant Around the World, Says Study
Looks To Good To Be True
Cybercrime and Intellectual Property